A. Income of non-residents from rentals or
royalties for the use of or for the privilege of using patents, copyrights,
secret processes and formulas, goodwill, trademarks, trade brands, franchises,
and other like property in this state is taxable if such intangible property
has a business situs in this state within the meaning of subsection (C)
below.
B. Income of non-residents
from intangible personal property such as shares of stock in corporations,
bonds, notes, bank deposits and other indebtedness is taxable as income from
sources within this state only if the property has a situs for taxation in this
state. However, if a non-resident buys or sells stocks, bonds, and other such
property in this state or places orders with brokers in this state to buy or
sell such property regularly, systematically, and continuously as to constitute
doing business in this state, the profit or gain derived from such activity is
taxable as income from a business carried on here irrespective of the situs of
the property for taxation.
C.
Business situs of intangible personal property
1. Intangible personal property has a
business situs in this state if it is employed as capital in this state or
possession and control of the property has been localized in connection with a
business, trade, or profession in this state so that the substantial use of the
property and the value attached to it become an asset of the business, trade,
or profession in this state.
Example: If a non-resident pledges stocks, bonds, or other
intangible personal property in this state as security for the payment of
indebtedness, taxes, etc., incurred in connection with a business in this
state, the property has a business situs here. Again, if a non-resident
maintains a branch office here and a bank account on which the agent in charge
of the branch office may draw for the payment of expenses in connection with
the activities in this state, the bank account has a business situs
here.
2. If intangible
personal property of a non-resident has acquired a business situs here, the
entire income from the sale thereof is income from sources within this state
and is taxable to the non-resident regardless of where the sale is
consummated.
D.
Transactions in this state extending over a period of less than 6 months shall
not constitute doing business within this state.
